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The impact of age-specific minimum wages on youth employment and education: A regression discontinuity analysis

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  • Dayioglu, Meltem
  • Kucukbayrak, Muserref
  • Tumen, Semih

Abstract

We exploit an age-specific minimum wage rule - which sets a lower minimum wage for workers of age 15 than the adult minimum wage paid to workers of age 16 and above - and its abolition to estimate the causal effect of a minimum wage increase on youth employment and education in Turkey. Using a regression discontinuity design in tandem with a difference-in-discontinuities analysis, we find that increasing the minimum wage reduces the employment probability of young males by 2.5-3.1 percentage points. We also document that, initially, the minimum wage increase does not lead to a major change in high school enrollment, while the likelihood of transitioning into "neither in employment nor in education and training" (NEET) category notably increases. However, in the medium term, the NEET effect is transitory; school enrollment increases over time and absorbs the negative employment effect. We argue that policy effects have mostly been driven by demand-side forces rather than supply side.

Suggested Citation

  • Dayioglu, Meltem & Kucukbayrak, Muserref & Tumen, Semih, 2021. "The impact of age-specific minimum wages on youth employment and education: A regression discontinuity analysis," GLO Discussion Paper Series 973, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:973
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    2. Redmond, Paul & Staffa, Elisa & McGuinness, Seamus & Gilmore, Oisín, 2023. "Sub-minimum wages in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS167, August.
    3. Siobhan Lucey & Maria Grydaki, 2023. "University attendance and academic performance: Encouraging student engagement," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(2), pages 180-199, May.

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    More about this item

    Keywords

    Age-specific minimum wages; youth employment; education; regression discontinuity design;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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